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Cooperatives

A program to build trust

Specially developed software manages business for Kenyan coffee cooperatives

Rop Kiplagat

Specially developed software helps Kenyan coffee cooperatives manage their business, and provides their members with accurate accounts and transparent record keeping.

Smallholder farmers operating in cooperatives contribute around 70% of Kenya’s total coffee production, with the rest produced by larger plantations and estates. However, Kenya’s coffee production has fallen since the glory days of the 1970s, when over 100 tonnes were produced annually; in 2009, just 54 tonnes were produced. Coffee prices have also fluctuated greatly during this time, leaving farmers with an unpredictable income.

Famers are concerned about mismanagement in the factories which process their dried coffee beans. Most factories keep handwritten records, which many farmers find difficult to trust. Kenyan farmers often talk of ‘ghost kilograms’, where factory clerks are suspected of entering incorrect data, leading to lower payments. In an effort to streamline the management process in the factories, and make sure farmers get the right price for their product, the Kenya Coffee Producers Association (KCPA) looked for a more trustworthy system.

KCPA, an association working with producer groups, found several software applications that other cooperatives were using, but the license costs to introduce these systems to all its member organisations would have been prohibitive. They then discovered CoopWorks, open-source software that had originally been developed for dairy cooperatives.

The software is available to download for free and has no licensing costs, and KCPA found funding to pay developers to adapt the system to meet their specific needs. A local company, Flametree Systems Engineering, whose engineers had been involved with the original version of CoopWorks, started customising the software in late 2009.

CoopWorks tracks all the steps of coffee collection, processing and sales. The system has a member management feature for collecting the data of individual members. It has an accounting module with cash book registers, ledgers and a payroll system. Other features include asset registration, loan management, inventory for the cooperative store and report publication.

Open accounts

When farmers arrive at the cooperative with their coffee beans, they place their delivery on a digital scales. Their name is displayed on the computer screen along with the date and time of delivery. The readings are taken directly from the scales without any human intervention. The clerk simply clicks the ‘next’ button to capture the data to the system and provide the farmer with a printed delivery receipt.

With the old manual data entry system, the cooperatives did not know how much coffee the milling factory would produce from their beans, and therefore, did not know what the financial return would be. The new system, however, can convert the coffee bean weight into an estimated value once it goes into the mills. The software also monitors the coffee deliveries based on each cooperative’s tracking numbers. Once the coffee is sold, the payment is received into the system and credited to the appropriate cooperative’s account.

If a farmer bought inputs from the cooperative store on credit, such as fertilisers or pesticides, the system books the transactions under the farmer’s name. At the end of the season, the farmer’s total delivery is added to their account, goods bought from the store on credit are deducted, and the final pay calculated. The member receives a statement detailing all the deliveries made against any goods taken in credit. If the member has loans, the system also tracks these and deducts the amount.

KCPA has developed its website to deliver information to members on their cell phones via SMS, including coffee and input prices. The association is looking to expand the capabilities of the software by linking it to mobile banking schemes, so that members can check their account and receive payments using their cell phones.

To support the adoption of CoopWorks, a network of service providers – independent ICT companies based throughout the country – will offer affordable training and support to their local cooperative.

The system is still new, but KCPA expects that individual members will benefit from increased earnings as a result of operational efficiency and reduced overheads. The credit rating of their associated cooperatives should also rise as a result of automation. The ability to quickly produce accurate reports on cultivation, milling, marketing and sales will improve transparency and accountability. These combined features will settle many farmers’ fears and, as trust is restored in the sector, should encourage more people to join their local cooperative.